The Buddha On Hoarding Wealth

Obtaining wealth in immoral ways and using it to harmful ends are two evils associated with wealth. A third is hoarding wealth — refusing to either share one’s wealth or put it to good use. In this story, the Buddha recounts the evils of miserliness:

Once, King Pasenadi of Kosala visited the Buddha. The King told the Buddha that a rich old miser had recently died leaving no heir to his huge fortune, and the King had gone to oversee the transfer of the miser’s wealth into the kingdom’s treasury.

King Pasenadi described the amount of wealth he had to haul away: eight million gold coins, not to mention the silver ones, which were innumerable. And, he said, when the old miser was alive he had lived on broken rice and vinegar, dressed in three coarse cloths sewn together, used a broken-down chariot for transport and shaded himself with a sunshade made of leaves.

The Buddha remarked:”That is how it is, Your Majesty. The foolish man, obtaining fine requisites, supports neither himself nor his dependents, his father and mother, wife and children, his servants and employees, his friends and associates, in comfort. He does not make offerings, which are of great fruit, and which are conducive to mental well-being, happiness and heaven to religious mendicants.

That wealth unconsumed and unused by him is confiscated by Kings, stolen by thieves, burnt by fire, swept aside by floods, or inherited by unfavored relatives. His wealth, accumulated and not used, disappears to no purpose.

His wealth is like a forest pool, clear, cool and fresh, with good approaches and shady setting, in a forest of ogres. No-one can drink, bathe in or make use of that water.

“As for the wise man, having obtained fine requisites, he supports himself, his mother and father, his wife and children, his servants and employees, and his friends and associates comfortably, sufficiently. He makes offerings, which are of great fruit, and which are conducive to mental well-being, happiness and heaven to religious mendicants.

The wealth that he has so rightly used is not confiscated by Kings, thieves cannot steal it, fire cannot burn it, floods cannot carry it away, unfavored relatives cannot appropriate it. The wealth rightly used by him is put to use, it does not disappear in vain.

His wealth is like a forest pool not far from a village or town, with cool, clear, fresh water, good approaches and shady setting. People can freely drink of that water, carry it away, bathe in it, or use it as they please.

“The evil person, obtaining wealth, neither uses it nor lets others use it, like a forest pool in a haunted forest — the water cannot be drunk and nobody dares to use it. The wise man, obtaining wealth, both uses it and puts it to use. Such a person is exemplary, he supports his relatives and is blameless. He attains to heaven.”

“Your Majesty, those people who, having obtained vast wealth, are not intoxicated by it, are not led into heedlessness and reckless indulgence which endangers others, are very rare in this world. Those who, having obtained much wealth, are intoxicated by it, led into heedlessness and reckless indulgence which endangers others, are truly of far greater number.”

Elsewhere in the Buddhist scriptures, the miserly person is likened to a bird called the “mayhaka” bird, which lives in the fig tree. While all the other birds flock to the tree and eat its fruits, all the mayhaka bird can do is stand there calling out “mayham, mayham” (“mine, mine”).

34 Responses to The Buddha On Hoarding Wealth

I sometimes feel a little guilty for having a large portion of my wealth in physical precious metals. That is probably a form of hoarding, but I suppose it can be excused in times such as these when good productive investments are hard to come by. I definitely plan to invest in productive enterprise as soon as the global economy gets going again though.

Schalk don’t feel so bad.Buddhism fully understands the fact that humans have material needs.And each person has differing needs.Saving is not hoarding,I don’t think you are starving yourself while you hoard bullion?

As an aside, might I ask you some questions about your investments?—–especially as you are South African.And I would like to understand how people from this major producer country see gold etc.

Sure, feel free to ask some questions, although the fact that I am buying bullion was not shaped in South Africa, but rather through my studies into the current state of the global economy. My conservative view on personal finances (my determination to save and my fear of debt) was shaped in South Africa though.

Could we start with this: ‘My conservative view on personal finances (my determination to save and my fear of debt) was shaped in South Africa.’?
What did you observe?Were there some personal experiences that made you feel this way?
I’m sorry if I intrude.Please share with me whatever you are comfortable sharing.

Well, I got this view from my parents who grew up on farms in a rather inhospitable part of the country. Back in those days (50+ years ago) life was pretty tough and there was no government welfare to bail you out if you got into trouble or even if the rains just refused to fall. Being financially irresponsible in such an environment could literally be life threatening and my parents were therefore taught to live well within their means, save all they can and avoid debt as far as at all possible. They did not forget those lessons and passed them down pretty efficiently to me and my brother.

Nowadays most middle-class South Africans are standard Americanized consumers though. But perhaps my conservative view on personal finances will return to the mainstream again one day when a painful global recession/depression has taught us our lesson…?

I think things need to get a lot worse for people to become savers.Still a lot of people are thinking of increasing incomes in future.There is no fear that incomes might cease abruptly.
I understand how farmers dependent on rains will choose to become financially conservative.Farmers in India who have to gamble on the vagaries of the monsoons have most of their savings in gold/silver even while the government is trying to popularize bank deposits.
Do South Africans have a gold culture like Indians.I ask because SA is a producer nation and makes the krugerrands.And what about diamonds.Do retail investors put their money in them or is it just DeBeers?

From my experience, South Africans don’t really have much of a gold culture, but I am from the southern part of the country while the gold mines are up north. I’ll actually have to ask my parents how they saved in the old days, but I grew up exclusively using a standard fiat currency banking system and never even thought of gold as a monetary metal.

It is also made a little more complex by the great diversity of South Africa. Ethnic groups still behave very differently and have different views on wealth. In general, Europeans in South Africa have a very similar view on wealth as the rest of the western world, while Africans still see wealth as having many wives and children (which is causing great problems with poverty and HIV). This notion is reinforced by the current president, Jacob Zuma, who has five wives and around 20 children…

In general I’m afraid that the average South African is far too poor to be able to afford a Krugerrand or a diamond. South Africa also has a rather terrible rate of violent crime, especially in the northern parts where the mines are located, implying that it is much safer to just keep your wealth in a bank.

We also have a large Indian community which has a reputation of being savvy business people. It is possible that this group saves more money in gold. But I’m not sure about that either because the Indians are concentrated in the north eastern parts of the country and I never really had any direct contact with them.

Schalk do write about how your parents saved in the old days.I learnt a lot by asking older family members about economics.None of today’s situations are all that new.Just the figures are bigger and events unfold faster simply because we now have the technology to make that possible.
Your note is the first time I have sat back to appreciate the diversity of SA.I did know about the 11 official languages but saw it in terms of India’s multiple languages.I didn’t appreciate the very real differences in outlook.
So who do you think have the Krugerrands?The Sovereigns were made for the British upper class and then became the coin of choice for the people of the Commonwealth.
Take a look at these graphs:http://goldprice.org/30-year-gold-price-history.html
What is your explanation for the similarity of the Rupee and Rand charts?Depreciation?What was the cause in SA?

I think Krugerrands are probably spread across the world. Most collectors and investors would like to own a few of these.

Those graphs are certainly very interesting and I agree with you that the similarity in the devaluation of the Rand and the Rupee is quite striking.

Pre-1994, South Africa’s economy was quite distorted due to apartheid and the currency suffered because of that. International pressures were building to remove this oppressive regime even in the 70s and 80s and the resulting intentional sanctions hurt the demand for the Rand. But even though apartheid was oppressive, it actually created a lot of infrastructure and facilitated rapid population growth which probably expanded the money supply substantially.

After 1994, I have to admit that poor performance of the Rand was probably due to large problems such as massive mismanagement, corruption, crime, HIV/Aids and a new government which was (and still is) totally out of its depth. With all the international goodwill, our vast mineral wealth and our young and under-developed workforce, South Africa should have been a true world economic powerhouse by now, but unfortunately that just never happened.

Schalk do you think there might be something to this?http://www.zealllc.com/2002/ransack.htm
Devaluation of the rupee I think is due to the deficits socialistically minded governments ran up and part a deliberate way to maintain export competitiveness.
I still have no good explanations for those graphs.In fact I asked you about it hoping you could cast some light on the matter.

I finally got around to reading the essay. It is definitely interesting, but I always try to stay away form such market conspiracy theories. I see such deliberate market manipulation using all of our man-made illusionary wealth transfer mechanisms (fiat money, derivatives, ETFs etc.) as pure theft and just get worked up unnecessarily if I think about it for too long. In fact, I see all of these central bankers and market speculators who make millions while adding absolutely no real value to society (and causing massive economic instability in the process) as an important cause of the trouble we are in today and the pain that still lies ahead for millions (perhaps even billions) of people.

But anyway, such short term speculatory attacks cannot explain the long term similarities between the devaluation of the Rand and the Rupee. Such a trend has to be explained by longer-term socio-political factors. Both India and SA are developing countries with relatively similar population growth rates and age-demographics and, while I know very little about Indian politics, there are probably some similarities in government policies through the years.

I think the fact that India has greatly out-performed South Africa in recent years despite South Africa’s political liberation and vast mineral wealth is also reflected in the currency performance. In 1994 one could get 9.2 Rupees for 1 Rand. Now one can only get 6.6 Rupees for a Rand.

South Africa has almost no oil, but it has a lot of coal. During the economic sanctions under Apartheid, South Africa was forced to develop an innovative technology for getting liquid fuels out of coal (Fischer-Tropsch process) which has proven to be very beneficial and still provides most of the diesel in the country.

However, SA still imports a lot of oil which contributes greatly to our worrying current account deficit.

Since both countries must import oil,they must need to export to pay the oil bill.Would devaluation to maintain export competitiveness explain both graphs?
BTW I had to mug up the Fischer-Tropsch process in college,I always assumed it must be a German innovation.Fancy it was from SA!

Hehe… Yeah, South Africans can be pretty innovative. South Africans also invented things like the CAT scan and the heart transplant.

Perhaps devaluation to maintain export competitiveness might be a factor, but I suppose that this strategy is only profitable if you are running a trade surplus which is not the case for South Africa at the moment. I also think that the majority of South African exports are in the form of minerals for which there is not that much competition.

I knew about the heart transplant but not the CAT Scan.
Why do you say that devaluation only helps in case of a trade surplus?Devaluation will undercut the competition and open up export markets and help maintain the lead in them.

Well, I always try to think about what would be best for the country as a whole in the long term. Devaluation will help exporters and create some jobs, but it will also increase the cost of living due to inflation and a sharp rise in import costs. The question is just which one of these factors will be dominant and I think that the balance of trade is a good indicator to use for this purpose.

But yes, I can see how politicians would choose the former. You can win many more votes by promising that you will create many jobs by pumping a lot of cheap money into the system through artificially low interest rates and “stimulus” than you can by saying that you will balance the budget and keep inflation low. This short term allure is why Keynesian economics has been allowed to ruin the developed world. Guess we will have to wait and see if the developing world learns anything from the mistakes of the developed world.

True.But in India’s case there was a deliberate tilt towards Swadeshi-be Indian buy Indian,import substitution and being self reliant.So making imported goods expensive had its uses.And the high cost of oil has forced Indian Industry to be fuel efficient.I supposed similar situations must exist in SA.

That sounds good. But it is always hard to figure out whether the pros will outweigh the cons when talking about things as complex as economic and monetary policy. I hope it works for India, but I have my doubts about South Africa. Just as an example; one of South Africa’s primary poverty problems is transportation of poor workers who live in squatter camps to jobs in the cities. Rising oil import prices will make this transportation more expensive and could actually cost many very poor people their jobs. South Africa has also become a net food importer which implies that the poor will again suffer from a weaker Rand.

But I’m glad I’m not an economic strategist. These issues are so complex that you never really know if you are doing more harm than good. And the lives of millions of poor people are affected by your decisions. That is a lot of pressure…

Oh the Swadeshi I spoke about was more important in the early years of India.They were the principles underlying the Freedom Movement.I thought there might be similarities because of the Gandhian Influence.

India has slums and shanties in between high rises in the cities.Why do the South African poor live outside the city?Or is it more like our working class who commute to the city via suburban rail since they can only afford to own houses outside the city?

Why is SA having a problem growing enough food?This is something we Indians need to understand.Agriculture is falling out of fashion for many youth in India,And in a couple of decades we might have problems like SA if we don’t pay attention now.

Wow, does it really work to have slums within the city itself? I suppose that has to devalue the surrounding property quite substantially. But in South Africa I think this also has to do with Apartheid. Before 1994, most Africans lived in the homelands and those of European descent lived in the cities. Most South African cities therefore look like modern European cities and simply do not have any room for informal settlements within the city itself. Therefore squatter camps usually grow around the cities.

Part of the transportation problem in South Africa is that our rail system has become totally dysfunctional under the current government. Most poor people are therefore dependent on an informal minibus-taxi transportation service which is very poorly organized and actually very dangerous due to unroadworthy vehicles, irresponsible driving, overloading and turf wars. Being a poor person in South Africa definitely looks very hard and I am very glad that I was born to a normal middle-class family.

South African agriculture faces a wide range of problems, most of which are probably uniquely South African. Of course, food demand is rising as the population keeps on growing and per-capita spending increases. Also, my father who is an agricultural research scientist has to spend a lot of his time to get private research funding because the state gives very limited support.

But the primary factor is probably the racial intolerance that is still alive and well in South Africa. Native Africans feel that they have a historical claim on all the farmland in the country and feel that this land is not being redistributed from whites to blacks quickly enough. In addition, they are becoming frustrated because the vast majority of poor blacks have not seen any change in their living conditions over almost two decades of democracy.

The tragic result has been a long series (3000+) of brutal farm murders which is making farming extremely unattractive and severely hurting outputs. In fact, white farmers in South Africa are rated at level 5 of the global Genocide-Watch program (level 7 is all out genocide).

In addition, the farms which have been successfully repossessed from whites to blacks have mostly fallen to ruin because the recipients do not have the necessarily skills to run a commercial farm. Naturally, all of these things just throw further fuel on the racial fire and deepens the racial divide.

I suppose that Indians do not have these kinds of problems? Avoiding widespread and systematic class-conflict will certainly help a lot.

Here is a picture from round my home.I live on the sea shore(Worli Sea Face).There is a line of hills behind my home(Worli Woods)and then a road which leads to this place (Worli Naka).So I am talking easy walking distance.http://cdn8.wn.com/pd/20/22/d6189d641b836fe8f4737380b9d9_grande.jpg
This picture is taken from the ramparts of the Worli Fort.And the kutcha house belong to the Worli Village-An urban village of the original inhabitants of Mumbai,the Koli Fisherfolk.The bridge is the Worli Bandra Sealink.You can even see my building in the picture,With or without slums/shanties etc.South Bombay rates are not cheap.Atleast $1000 USD psf in this area,
What are homelands?
Many towns and cities in India too have impromptu taxis to make up for poor municipal transport.But things are a little more organized inside Mumbai City limits.But in peak times our buses and trains look like the packed trains the Nazis ran.
How exactly does this repossession of farmlands work in SA? Is it a judicial process?
In India we don’t have a racial problem among farmers but regional,linguistic and caste divides do exist and sometimes fights do erupt on matters like water for irrigation etc,or even because formerly weaker sections have become more assertive.But we don’t have this level of violence.And our government has sunk money big time into agricultural research and farmers themselves go abroad to places like Israel on their own initiative to learn better farming.

Wow that picture is quite interesting. But I don’t think you will find slums in among skyscrapers like that in South Africa.

$1000 psf? Are you sure? That is double even the crazy Norwegian home prices…

Homelands were the area where the native Africans were forced to live under Apartheid. The idea was to have the Africans live in the areas they traditionally inhabited and thereby achieve separation or “apartheid” of races.

The government is trying to buy out white farms, but the process has been extremely slow primarily due to the massive size of the typical South African farm and the unfortunate incompetence of the average South African government official.

For this reason, some radical populous leaders have been sweeping up young blacks lately and talking a lot about taking back farmland by force without any compensation – something similar to the atrocities that completely destroyed our neighboring country, Zimbabwe.

Yes sure.Over $1000 psf,Why do you think so many Indians now buy homes abroad.It sounds fancy,helps you expand your lifestyle and it costs a darned sight less!
Say what would be the price of the cheapest apartment/studio/cottage-the cheapest home I could get in Norway?Ditto for SA?Are there any residency requirements?
How does the SA government decide on the buyback price of a farm.Would your family too have to give up your farm?Its so sad,land sort of grows on you,and it is more useful than gold.

Well, I bought my 63 m2 flat for about $320000 which I thought was pretty expensive, but is actually about the norm in Trondheim (the Norwegian town I live in). Depending on the location, home prices probably vary about 20% to either side of this average. $320k for 680 ft2 works out to almost $500 psf. I’ve never really looked at home prices in South Africa, but my parents said that their home (which is probably about 200 m2) will probably be worth about the same as the flat I bought in Norway.

I think one needs at least a residency permit to buy property in Norway, but perhaps there are ways around that. For South Africa I am not sure since I never tried to buy any property there.

Are Indian home prices also building into a bubble? At $1000 psf, the home price to income ratio must be off the charts! I really am quite surprised by that.

At present, the government still negotiates prices with farmers under a willing-buyer-willing-seller model. But this has been an incredibly slow process with only about 4% of the farmland being successfully redistributed over the last two decades. This is while 5% or so of farms go up for sale every year…

Yes, I really feel for farmers in South Africa. Many of these farmers have built up their farms from scratch over a number of generations and now face the possibility of having their farm taken from them or even facing extreme violence. This is indeed very sad.

The $1000 psf rate is not very representative.First off it is in the MMR and that too Greater Mumbai and is part of the Island City.Second it is sea facing and in an area with many business owners, bureaucrats, politicians etc.So it attracts more people with money.So this is a premium area.But there are more expensive areas adjacent to this one.Such as Altmount Road where Antilla-the worlds most expensive home is located.
$500psf will still get you places in the island city but in less fashionable areas/in the interiors without a sea-view.
Yes Bombay rates are high,higher than any other Metro in India.And that is one reason why more and more people are commuting into the city.These are the only areas in which most wage earners can afford to buy a home of their own.And when I say wage earners,I’m including lawyers, bankers, doctors, journalists etc.
Other cities might have lower rates but not that much lower.Even village home prices are being quoted in lakhs,Labour and construction materials have become expensive country wide.
Well I will say that there is no logic that I fully understand for land rates in India.But compared to American homes I think our rates are still sane.I think income/home price ratios are not a good way to determine if real-estate is in the danger zone.For one Indian’s see land as they see gold,an inflation hedge.And homes/land are seen as places to save money and grow rich with the help of inflation.Second I believe that our GDP figures are a lot of rubbish because we have a large amount of black and grey money being generated each day which is not captured in government records.We also have a large informal economy where the government has no say.Also the Indian economy is far from fully monetized despite the government’s eagerness to bring everybody and all their activities under the purview of the banking system. All this unaccounted income finds its way into real-estate,
After 2008 there is a noticeable slow-down in the construction industry but hardly a collapse in price.Builders here cut the supply coming into the market and most owners refuse to lower expectations.So there are no bargains here unless someone is in extreme distress and even in this case there are many buyers.
What are the white farmers who have sold out doing now?

Thank you,I’m glad you’re enjoying my blog.
I don’t know if blogging will be around 50 years from now,But I’d like to leave this blog as a legacy.So I try to fill it with stuff that will be relevant even in the future,